Automatic Stabilizers Create ________ During Recessions from Increased Government Spending

question 15

Multiple Choice

Automatic stabilizers create ________ during recessions from increased government spending on welfare and unemployment insurance, and reduced tax revenues, and create _________ during peak growth periods of the economy from reduced government welfare spending and increased tax revenues.

• A) fiscal stimulus, fiscal contraction
• B) fiscal stimulus, fiscal stimulus
• C) fiscal contraction, fiscal stimulus
• D) fiscal contraction, fiscal contraction

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Definitions:

Fixation Evidence

Data or observations supporting the psychological concept that individuals can become stuck at an early developmental stage, affecting future behavior and attitudes.

Regression

A defense mechanism in psychoanalysis where an individual adopts more childish manners of dealing with stress and conflict.

Internally Motivated

Being driven by internal desires and values rather than external rewards or pressures; having personal motivation for actions or beliefs.

Externally Motivated

When an individual's behavior is driven by external rewards such as money, praise, or approval, rather than intrinsic satisfaction or interest.